Judgment Lien

Full definition

A judgment lien results from a lawsuit that a creditor (or debt buyer) wins against a borrower. The lien represents a legal claim against the borrower's assets and formally establishes the debt in the court record. The lawsuit process: After a personal loan defaults and collection efforts fail, the original creditor or debt buyer can file a civil lawsuit in the applicable state court. The borrower is served with a summons. If the borrower does not respond (most do not - over 70% of collection lawsuits result in default judgments), the judge enters a judgment for the creditor. If contested, the court holds a hearing. Enforcement of a judgment: Wage garnishment: the creditor can garnish up to 25% of disposable earnings (federal law caps this; some states are lower). Bank account levy: funds in checking or savings accounts can be seized up to the judgment amount. Property lien: in most states, a judgment can be recorded as a lien against real property, which must be satisfied before the property can be sold or refinanced. Vehicle levy: some states allow creditors to seize and sell non-exempt vehicles. Exemptions: Federal law and state law protect certain assets from judgment enforcement. All states exempt a portion of wages from garnishment. Social Security and SSI benefits are fully exempt from civil creditor garnishment (though not from tax or child support). Many states have a homestead exemption protecting equity in a primary residence. IRA and 401k funds are generally protected. Statute of limitations on judgments: A judgment itself has a life (typically 10-20 years, depending on state), after which it expires and is no longer enforceable without renewal. Creditors can renew most judgments for additional terms. Judgments appear on credit reports for 7 years from the filing date.

• Wage Garnishment
• Default
• Debt Buyer
• Statute of limitations on debt